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Cognac drags LVMH spirits sales down
The spirits arm of LVMH declined by double digits in the first six months of 2024 due to ‘weak demand’ for Hennessy Cognac in China.
For the first half of 2024, Paris-headquartered LVMH reported that its ‘Cognac & spirits’ division saw sales drop by 10% organically to €1.41 billion (US$1.5bn), while the Champagne and wine arm fell by 8% to €1.39bn.
Total wine and spirits sales for the French group declined by 9% to €2.8bn (US$3bn) to report the biggest drop among LVMH’s divisions. The luxury conglomerate’s other business units include fashion and leather goods, perfume and cosmetics, watches and jewellery, and ‘selective retailing’.
Profit from recurring operations for wine and spirits was down by 26% to €777 million (US$842m) during the first half of 2024, with spirits accounting for €426m (US$462m).
Wine and spirits fell by 12% in the first quarter and by 5% in the second quarter. Full-year sales for the division dropped by 4% in 2023.
While demand dragged in China, Hennessy saw a return to growth in sales volumes in the ‘cautious’ US market during the second quarter of 2024, LVMH noted.
The launch of Hennessy’s new Made for More campaign, which will be fully rolled out in the second half of the year, should provide a further boost, the group said.
The Asia Pacific and Latin America regions also experienced ‘strong growth’, buoyed by the expansion of local distribution hubs.
LVMH also noted that Belvedere benefitted from the ‘ongoing success’ of its Belvedere 10 vodka, backed by a campaign featuring rapper Future. Cuban rum Eminente delivered ‘strong growth’ in Europe, boosted in France by its first advertising campaign.
In its half-year report, LVMH said: “Amid an overall downturn in consumer spending, retailer destocking and an unfavourable market environment in China, the normalisation of demand that began in 2023 continued throughout the first half of 2024.”
LVMH also noted that the group had ‘continued to manage costs while pursuing growth opportunities and enhancing the desirability of their brands’.
Outlook for wine and spirits
Looked ahead, the company said: “2024 looks set to be a year of consolidation amid cautious management of inventory levels among distributors. Confident in its Maisons’ leadership positions, the wines and spirits business group will continue to pursue its strategy of winning market share while continuing to carefully manage costs.
“Brand visibility remains a key priority in seizing growth opportunities: following strong brand activation in connection with the Paris 2024 Olympic and Paralympic Games, the Maisons will continue to raise their profiles in the run-up to the year-end.”
In June 2023, LVMH’s wine and spirits arm, Moët Hennessy, invested millions of euros into opening a five-floor bar in Paris.
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